Pakistan’s total cement industry dispatches in February 2023 are likely to reach 3.8-4Mt, down 8-12 per cent YoY with local dispatches expected to be down by 10-14 per cent YoY. However, deliveries are likely to remain more or less flat MoM despite fewer working days in February 2023 (28 days), which is likely due to the resumption of construction activities after the winter.
According to an assessment of Topline Securities, in the 8MFY22-23 (July 2022-February 2023), industry cement sales are expected to fall by around 15-19 per cent YoY with local sales also posting a decline by 12-16 per cent YoY. Lower dispatches in local cement dispatches are due to rising construction costs and inflationary impact restricting the demand growth.
Exports during February 2023 will also likely remain flat YoY and MoM at 0.41Mt. In 8MFY22-23 export sales are expected to be down 39-43 per cent YoY on the back of the global economic slowdown and unfavourable export pricing.
Industry utilisation during February 2023 is anticipated to clock in at 62 per cent with an 8MFY21-22 average of around 59 per cent.
Cement prices
As per the Pakistan Bureau of Statics (PBS), cement retail prices in February 2023 averaged PKR1066/bag (US$4.07/bag) in the north, which is PKR37/bag higher than the price witnessed in January 2023. In the south, the average prices reached PKR1100/bag, with an increase of PKR32/bag from January 2023. The price increase in both regions is primarily due to the recent increase in FED from PKR1.5/kg to PKR2/kg on cement in mini-budget.
Going forward, some recovery is anticipated in cement dispatches as flood rehabilitation programmes progress as we approach general elections. Experts opinion that lower coal prices could also support the sector margins going ahead.
